Earlier in the semester we looked at market demand and market supply, what is the difference between market demand/supply and aggregate demand/supply? If there is a decrease in the price level, how does this effect the aggregate demand curve? When looking at the long run aggregate supply curve, what does the curve look like and why? What are the three reasons for the downwards sloping aggregate demand curve? What does this tell us about the relationship between the price level and real GDP?Given the following situations, what would happen to the aggregate demand or aggregate supply curves? Businesses expect there will be an increase in the minimum wage paid to employees. Stricter regulations are put in place limiting the amount of pollution that can be emitted into waterways. Businesses become optimistic about the state of the economy. The government decreases spending on goods and services. There is an increase in the price level of goods and services in the US. When we have an increase in aggregate demand and the short run aggregate supply stays constant, what happens to the equilibrium price level and real GDP? When we have a decrease in the short run aggregate supply and aggregate demand stays constant, what happens to the equilibrium price level and real GDP? When we have an increase in both aggregate supply and aggregate demand, what happens to the equilibrium price level and real GDP? As we have less and less spending by consumers (AD shifts to the left), what do you think is happening in the economy and what phase of the business cycle do you expect the economy to be experiencing? Explain How can changes in aggregate demand or aggregate supply cause inflation? Explain using an aggregate supply/aggregate demand graph